Report of the Supervisory Board of
STMicroelectronics
March 18, 2005

Annual Results

We reported our full year 2004 revenues and earnings on January 26, 2005. During 2004, ST produced annual revenues of approximately $8,760 million, driven primarily by wireless, digital consumer and automotive applications, which all grew faster than the Company average, up 21% from the $7,238 million reported in 2003. Gross profit was $3,228 million, or 36.8% of net revenues, compared to $2,566 million or 35.5% in 2003. Operating income was $683 million, or 7.8% of net revenues, compared to $334 million or 4.6% of net revenues in 2003. Currency fluctuations affected ST’s reported cost of goods sold and operating expenses for 2004, thus negatively impacting its bottom-line results in 2004 compared to 2003.

Proposed 2005 Cash Dividend and Retained Earnings and Dividend Policy

Considering ST’s results in 2004, and upon the proposal of the Managing Board, the Supervisory Board recommends to the Annual General Meeting of Shareholders (AGM) the adoption of the annual accounts for the financial year 2004 and the distribution, out of ST’s profits realized during 2004, of a cash dividend of $0.12 per share, equal to last year’s cash dividend distribution.

The Supervisory Board, in conjunction with the Managing Board, has approved the following retained earnings and dividend policy, which is being presented to the AGM:

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Supervisory Board and ST Corporate Governance

The management of ST is entrusted to the Managing Board under the supervision of the Supervisory Board. The Supervisory Board advises the Managing Board and is responsible for supervising the policies pursued by the Managing Board as well as the general course of ST’s affairs and business.

Throughout 2004, the Supervisory Board devoted significant attention to monitoring corporate governance initiatives in the various jurisdictions in which ST is listed and incorporated, particularly implementing rules of the Sarbanes-Oxley Act of 2002 and final corporate governance listing standards of the New York Stock Exchange. The Supervisory Board focused on ensuring continuity of the Company’s Managing Board in view of the planned retirement of Mr. Pasquale Pistorio, the Company’s President and Chief Executive Officer since its foundation in 1987. The Supervisory Board established a new Nominating and Corporate Governance Committee. After approval by the 2004 AGM of ST’s policy on corporate governance, the finalized ST Corporate Governance Charter, Supervisory Board Charter, Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter and Strategic Committee Charter were all approved and posted on ST’s website. The charters are also available in print to any shareholder who may request them. ST’s current corporate governance policies, as enumerated in the Corporate Governance Charter, will be updated and expanded whenever necessary or advisable and ST will inform shareholders at its AGM of any significant changes in corporate governance policies and practices. In addition, the Supervisory Board reviewed the draft amendments to ST’s Articles of Association, which will be put to the March 18, 2005 AGM for approval. The proposed amendments result from changes in Dutch company law effective October 1, 2004 and from the Dutch Corporate Governance Code. The amendments mainly concern (i) the requirement for shareholder approval of the compensation policy (including stock-based compensation) of the Managing Board; (ii) Supervisory Board determination of compensation of the sole member of the Managing Board within the scope of ST’s compensation policy; (iii) the requirement for shareholder ratification of certain major Managing Board resolutions to significantly change the Company’s identity or nature; and (iv) the right of shareholders with at least a 1% participating interest in ST’s issued share capital (or a market value of at least €50 million) to add an agenda item to the AGM agenda subject to 60 days’ notice, unless the Company determines that such proposal would conflict with substantial interests of the Company.

In fulfilling their duties under Dutch law, Supervisory Board members serve the best interests of all of ST’s stakeholders and of ST’s business. The Supervisory Board is carefully selected based upon the combined experience and expertise of its members. In addition, as required by Dutch law, all of the members of the Supervisory Board, however originally selected, act independently in their supervision of ST’s management. The Supervisory Board has adopted criteria to evaluate the independence of its members in accordance with corporate governance listing standards of the New York Stock Exchange. In 2004, the Supervisory Board evaluated the members and determined that all members were independent from ST’s management, with the exception of Mr. Dunn, who at the time of the evaluation, was the CEO of ASML, which sold equipment to the Company in 2003. Since this determination, Mr. Dunn has stepped down as CEO of ASML.

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Proposed Supervisory Board Appointments

In February 2005, the Nominating and Corporate Governance Committee submitted its report to the Supervisory Board, recommending that the Supervisory Board propose to the shareholders that Messrs.  Arbola, de Waard, Lombard and Steve be appointed for an additional three-year term until the Annual General Meeting to be held in 2008, and that Mr. Dunn, Gavois and White be renewed for a one-year term, until the Annual General Meeting to be held in 2006, allowing the Supervisory Board the opportunity to consider renewals or new appointments in the coming years. Upon the proposal of Cassa Depositi e Prestiti to nominate, pursuant to its rights under shareholding agreements with ST Holding, our largest shareholder, Messrs. Antonino Turicchi and Matteo del Fante to replace the two outgoing members of the Supervisory Board, and following the Nominating and Corporate Governance Committee’s recommendation, the Supervisory Board approved this proposal to be made to the shareholders for approval. The Supervisory Board expressed its sense of appreciation to Mr. Alessandro Ovi and Mr. Riccardo Gallo for their many years of service on the Supervisory Board and their devotion to the development of STMicroelectronics.

Biographies of current Supervisory Board members and proposed new members are annexed to this Report and will be available on ST’s website.

Supervisory Board activity in 2004

During 2004, the Supervisory Board met ten times so as to closely monitor ST’s operations, strategy and evolution. Attendance at full Supervisory Board Meetings and Committee Meetings in 2004 was as follows:

The Supervisory Board reviewed ST’s results of operations, met with the corporate officers responsible for Research and Development, Manufacturing, and the Telecoms, Peripherals and Automotive (“TPA”) and Memory Products businesses to monitor ST’s projects, challenges, performance and prospects in an intensely competitive environment. In addition, the Supervisory Board supervised, oversaw and approved many ST corporate activities in 2004, including:

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The Supervisory Board’s committees were also very active in 2004.

Compensation Committee

The Compensation Committee, whose current members are Messrs. Steve (Chairman), Arbola (Vice-Chairman) and De Waard, met four times in 2004, including one meeting outside the presence of management and the CEO. Mr. Arbola was newly appointed as a committee member and Vice-Chairman by the Supervisory Board. Among its main activities, the Compensation Committee reviewed and approved the Company’s Managing Board compensation policy, and the compensation package of the CEO for the year 2004, and proposed to the Supervisory Board the CEO’s total compensation package, which approved it. The Compensation Committee also reviewed the CEO’s 2004 performance in light of objectives and bonus eligibility criteria and proposed adoption of the CEO’s bonus to the Supervisory Board. Eligibility criteria for the CEO to receive a bonus relate to ST’s revenue growth compared to that of its main competitors, its profitability, return on net assets, net cash flow, and market performance over the course of a fiscal year. The Compensation Committee also made a recommendation regarding the number of stock options to be granted to the CEO.

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The Compensation Committee approved the proposed 2004 allocation of stock options to ST’s executive officers and key employees pursuant to ST’s 2001 Stock Option Plan (the “2001 ESOP”), based on the NYSE closing price of ST shares two days after the AGM date. The Compensation Committee also reviewed and approved a proposal by the Managing Board to amend the existing 2001 ESOP for senior executives and key employees of the Company to provide for the grant of restricted shares instead of stock options to senior executives and certain key employees, subject to more restricted performance criteria to be fixed by the Supervisory Board and made public. The objective of the amendment is to better incentivize our senior executives and key employees. The maximum number of "restricted" shares shall be four million shares and shall fall within the outstanding number of approximately 15 million options that still remain to be granted under the existing 2001 ESOP. The amendment of the 2001 ESOP is proposed to the shareholders for approval with respect to the grant for the year 2005. The shareholders are also requested to confirm the Supervisory Board’s authority to reduce the vesting period and the term of outstanding stock options previously granted pursuant to the 2001 ESOP.

The Compensation Committee reviewed the compensation policy for ST’s senior executive officers as well as the Executive Incentive Program for all ST executives. In addition, the Compensation Committee recommended the grant of stock-based compensation, up to a maximum number of 100,000 Shares, to Mr. Bozotti for services to be rendered in 2005. The grant of such stock-based compensation to Mr. Bozotti will be tied to the performance of the Company, according to quantifiable criteria to be fixed by the Supervisory Board.

The Compensation Committee reviewed an expert report regarding the compensation of the Supervisory Board members and made proposals for the 2005 compensation structure. The 2002 Stock Option Plan for Supervisory Board members and professions expires at the upcoming AGM to be held on March 18, 2005. The Compensation Committee recommended the adoption of a new three-year stock-based compensation plan for Supervisory Board members and professionals instead of a stock option plan. The new 2005 Plan as proposed to the shareholders has the following terms and conditions:

The Supervisory Board decided to recommend approval of the new ST Stock-based Compensation Plan for the Board members and professionals to the March 18, 2005 AGM.

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Strategic Committee

The Strategic Committee, whose current members are Messrs. Steve (Chairman), Ovi, White, Arbola and Lombard, met four times in 2004, in the presence of the CEO, the Director of Strategic Planning and the CFO. Messrs. Arbola and Lombard were newly appointed to the Committee at the April 23, 2004 meeting of the Supervisory Board. Among its main activities, the Strategic Committee reviewed the Company’s long-term plans and prospects and various possible scenarios and opportunities to meet the challenges of the semiconductor market, which included the increasing costs of R&D and of capital investments in advanced production technologies.

The Strategic Committee was fully briefed on the main terms of a joint-venture in China with Hynix, in the memory field, including clarification on the level of saturation of the new fab production capacity and the relevant timeframe and expected figures on the goods manufactured under the joint venture. The Committee then submitted a favorable recommendation to the Supervisory Board to enter into the joint-venture.

The Strategic Committee also was consulted on various other matters.

Audit Committee

The Audit Committee, whose current members are Messrs. de Waard (Chairman), Dunn, Gallo, Gavois, and White, met twelve times during 2004. At many of these meetings, the Audit Committee received presentations on current financial and accounting issues and had the opportunity to interview ST’s CEO, CFO, General Counsel, external and internal auditors. On several occasions, the Audit Committee met with outside U.S. legal counsel, who explained and analyzed and explained actions required by the new New York Stock Exchange’s final and amended corporate governance rules and the Sarbanes-Oxley Act. In addition, the Audit Committee regularly discussed the progress of implementation of internal controls over financial reporting. The Audit Committtee also monitored the Company’s compliance with the European Directive that requires ST to prepare a set of accounts pursuant to international financial reporting standards (or IFRS) in the timeframe required, while the Company will continue to use U.S. GAAP as its primary set of reporting standards.

At the end of each quarter, prior to each Supervisory Board meeting to approve ST’s results and quarterly earnings press release, the Audit Committee reviewed ST’s interim financial information and the proposed press release and discussed with the independent registered public accounting firm those matters required to be discussed under SAS 61. In addition, the Audit Committee reviewed ST’s quarterly “Operating and Financial Review and Prospects” and interim consolidated financial statements (and notes thereto) before they were filed with the SEC and voluntarily certified by the CEO and the CFO (pursuant to sections 302 and 906 of the Sarbanes-Oxley Act).

The Audit Committee also proceeded with its annual review of ST's Internal Audit, as well as the scope, planning and costs of ST's external audit activities. In addition, and after a competitive bidding process and careful examination of the various proposals (including interviews of three audit firm candidates), the Audit Committee recommended to the Supervisory Board that PriceWaterhouseCoopers N.V. be proposed to the 2005 AGM for re-appointment as the Company’s external auditors for a new three-year term.

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The Audit Committee reviewed its Charter with the assistance of ST’s outside U.S. counsel, completed a self-evaluation and reported regularly to the Supervisory Board. The Audit Committee Charter was approved by the April 23, 2004 AGM and is posted on ST’s website.

In advance of its review of our draft annual Consolidated Financial Statements for the year ended December 31, 2004, the Audit Committee reviewed our external auditors’ statement of independence with them. The Audit Committee approved the compensation of our external auditors and also approved the scope of their audit, audit-related and non–audit-related services, held separate meetings with the external auditors and discussed ST’s critical accounting policies with our external auditors.

The Audit Committee reviewed ST’s conclusions as to effectiveness of Internal Controls in 2004, had various meetings with management, external auditors and approved ST’s internal audit plan for 2005. The Audit Committee also determined that three members of the Audit Committee qualified as “audit committee financial experts” and that all of its members are financially literate. The Audit Committee’s conclusions on such matters were reported to the Supervisory Board, which adopted them.

Finally, members attended an executive education program at Harvard Business School specifically designed to improve their skills in executing their duties and responsibilites on the Audit Committee of ST.

Nominating and Corporate Governance Committee

The Supervisory Board met after the April 23, 2004 AGM to resolve upon the Charter and composition of the new Nominating and Corporate Governance Committee. The Charter of the Committee was posted on ST’s website thereafter. On December 8, 2004, the Supervisory Board appointed Messrs. Steve, Arbola and de Waard to the Nominating and Corporate Governance Committee. Mr. de Waard was selected the Chairman of the Committee.

The Nominating and Corporate Governance Committee reviewed the structure and composition of the Supervisory Board in view of the pending expiration of the terms of all current members. The Nominating and Corporate Governance recommended that the Supervisory Board propose to the shareholders that Messrs.  Arbola, de Waard, Lombard and Steve be appointed for an additional three-year term until the Annual General Meeting to be held in 2008, and that Mr. Dunn, Gavois and White be renewed for a one-year term, until the Annual General Meeting to be held in 2006, allowing the Supervisory Board the opportunity to consider renewals or new appointments in the coming years. The Nominating and Corporate Governance Committee also received, reviewed and approved the proposal of Cassa Depositi e Prestiti to nominate, pursuant to its rights under shareholding agreements with ST Holding, our largest shareholder, Messrs. Antonino Turicchi and Matteo del Fante, the current Managing Director and Chief Financial Officer of CDP, to replace the two outgoing members of the Supervisory Board, for a three-year term until the Annual General Meeting to be held in 2008.The Nominating and Corporate Governance Committee also found that the two proposed members were independent of ST’s management, and complied with the Supervisory Board’s criteria for independence.

Finally, the Supervisory Board, in conjunction with the Managing Board, prepared the agenda for the AGM and recommends for adoption the proposed resolutions. The agenda, proposed resolutions and other information regarding the upcoming AGM are available on ST’s website and in print to any shareholder upon request.

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The Company is greatly indebted to Mr. Pasquale Pistorio for his very significant contribution as President, Chief Executive Officer and sole member of the Managing Board. We express our deep appreciation to Mr. Pistorio for his role in steering the Company since its creation in 1987 to become one of the leaders in the semiconductor industry.

February 11, 2005

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Current members of ST’s Supervisory Board

Bruno Steve has been a member of our Supervisory Board since 1989 and Chairman since March 27, 2002. He served as Vice-Chairman of the Supervisory Board from 1989 to July 1990 and from May 1999 through March 2002. From July 1990 to March 1993 and from June 1996 until May 1999, Mr. Steve also served as Chairman of our Supervisory Board. He has been with Istituto per la Ricostruzione Industriale–IRI S.p.A. ("I.R.I".), a former shareholder of Finmeccanica, Finmeccanica and other affiliates of I.R.I. in various senior positions for over 17 years. Mr. Steve is currently President of the board of statutory auditors of Alitalia S.p.a. Until December 1999, he served as Chairman of MEI. He served as the Chief Operating Officer of Finmeccanica from 1988 to July 1997 and Chief Executive Officer from May 1995 to July 1997. He was Senior Vice President of Planning, Finance and Control of I.R.I. from 1984 to 1988. Prior to 1984, Mr. Steve served in several key executive positions at Telecom Italia. He is also a professor at LUISS Guido Carli University in Rome.

Gérald Arbola has been a member of our Supervisory Board since 2004, when he was appointed to fulfill the remaining term of Jean-Pierre Noblanc, through the 2005 AGM. Mr. Arbola has also served as the Vice-Chairman of the Supervisory Board since his 2004 appointment. Mr. Arbola is an Executive Board member of Areva and its Chief Financial Officer. Mr. Arbola is a graduate of the Institut d’Etudes Politiques de Paris and holds an advanced degree in economics. Mr. Arbola joined the Cogema group in 1982 as director of planning and strategy for SGN, then served as chief financial officer at SGN from 1985 to 1989, becoming executive vice president of SGN in 1988, chief financial officer of Cogema in 1992. He was appointed as a member of the executive committee in 1999, and also served as chairman of the board of SGN in 1997 and 1998. Mr. Arbola has served as chief financial officer and member of the Executive Board of AREVA since July 3, 2001.

Doug Dunn was appointed to the Supervisory Board in 2001. Mr. Dunn currently serves on the Board of Directors of ARM plc and Sendo plc, both UK companies. Mr. Dunn also serves on the Board of MEDEA+ and the Board of Soitec, a French Company. From 1999 until 2004, Mr. Dunn was President and Chief Executive Officer of ASM Lithography Holding N.V., an original equipment manufacturer in the semiconductor industry. He was a member of the Managing Board of Royal Philips Electronics in 1998. From 1996 to 1998 he was Chairman and Chief Executive Officer of Philips Consumer Electronics and from 1993 to 1996 Chairman and Chief Executive Officer of Philips Semiconductors. From 1980 to 1993 he held various positions at Plessey Semiconductors. Prior to 1980, Mr. Dunn served in executive positions at Motorola Semiconductors.

Francis Gavois was appointed to the Supervisory Board in 1998. Mr. Gavois is a member of the Boards of Directors of Plastic Omnium and FT1CI and of the Supervisory Board of the Consortium de Réalisation (CDR). He also served as the Chairman of the Supervisory Board of ODDO et Cie until May 2003. From 1984 to 1997, Mr. Gavois held several positions, including Chairman of the Board of Directors and Chief Executive Officer of Banque Française du Commerce Extérieur (BFCE). Prior to that time Mr. Gavois held positions in the French government. He is Inspecteur des Finances and a graduate of the Institut d'Etudes Politiques de Paris and the Ecole Nationale d'Administration.

Didier Lombard has served as a member of the Supervisory Board since 2004 when he was appointed by the AGM to fulfill the remaining term of Rémy Dullieux, who had retired, through

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the 2005 AGM. Mr. Lombard currently serves as Executive Director and Member of the Executive Committee of France Telecom, in charge of Technologies, Strategic partnerships and New Usages. Mr. Lombard began his career in the R&D division of France Telecom in 1967, where he contributed to the development of several new products for France Telecom, in relationship with satellite and mobile systems. From 1988 on, he served as scientific and technological director at the Ministry of Research and Technology, General Director for industrial strategies at the Ministry of Economy, Finances and Industry, and Delegate Ambassador for national investments and president of the French Agency for international investments. Mr. Lombard is also a member of the board of directors of Thomson. Mr. Lombard is a graduate of the Ecole Polytechnique and the Ecole Nationale Supérieure des Télécommunications.

Tom de Waard was appointed to the Supervisory Board in 1998. Mr. de Waard was appointed chairman of the Audit Committee by the Supervisory Board in 1999, and chairman of the Nominating and Corporate Governance Committee in 2004. Mr. de Waard has been a partner of Clifford Chance, a leading international law firm since March 2000 and has been the Managing Partner of Clifford Chance Amsterdam office since May 1, 2002. Since January 1, 2005, Mr. de Waard has served on the Management Committee of Clifford Chance representing continental Europe. Prior to that, he was a partner at Stibbe, where he held several positions since 1971 and gained extensive experience working with major international companies, particularly with respect to corporate finance. He is a member of the Amsterdam bar and was President of the Netherlands Bar Association from 1993 through 1995. He received his law degree from Leiden University in 1971. Mr. De Waard is a member of the Supervisory Board of BESI N.V.

Robert M. White was appointed to the Supervisory Board in June 1996. Mr. White is a University Professor and Director of the Data Storage Systems Center at Carnegie Mellon University and serves as a member of several corporate boards, including that of Silicon Graphics, Inc. He is a member of the U.S. National Academy of Engineering and the recipient of the American Physical Society’s Pake Prize. From 1990 to 1993, Mr. White served as Under Secretary of Commerce for Technology in the United States Government. Prior to 1990, Mr. White served in several key executive positions at Xerox Corporation, Control Data Corporation and MCC. He received a doctoral degree in physics from Stanford University and graduated with a degree in physics from Massachusetts Institute of Technology.

Riccardo Gallo has been a member of the Supervisory Board from 1997 and his term expires at our annual general meeting of shareholders to be held on March 18, 2005. He is Associate Professor of Industrial Economics at the Engineering Faculty of “La Sapienza” University in Rome. He is also a member of the Board of Directors of Comitato Sir (since 1981). From 1982 to 1991, he served as Director General at the Italian Ministry of the National Budget. In the early 1990s, he served as Vice-Chairman of I.R.I, which was at the time the largest state-owned industrial holding. He currently serves as Chairman of IPI, the Italian Institute for Industrial Promotion. Mr. Gallo was previously a member of the Supervisory Board of ST Holding, a position he resigned in 2003.

Alessandro Ovi has been a member of the Supervisory Board from 1994 and his term expires at our annual general meeting of shareholders to be held on March 18, 2005. He received a doctoral degree in Nuclear Engineering from the Politecnico in Milan and a masters degree in operations research from Massachusetts Institute of Technology. He currently is Special Advisor to the President of the European Community and serves on the boards of Telecom Italia S.p.A.,

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Assicurazioni Generali S.p.A., N.W. Fund, E.U.P.A.C. (Capital Group) and he is a life trustee of Carnegie Mellon University and a member of the Corporation Development Committee of the Massachusetts Institute of Technology. Until April 2000, Mr. Ovi was the Chief Executive Officer of Tecnitel S.p.A., a subsidiary of Telecom Italia Group. Prior to joining Tecnitel S.p.A., Mr. Ovi was the Senior Vice President of International Affairs and Communications at I.R.I.

Proposed new members of ST’s Supervisory Board

Antonino Turicchi is proposed for appointment to the Supervisory Board at the annual general meeting of shareholders to be held on March 18, 2005. Mr. Turicchi has been Managing Director of the Cassa Depositi e Prestiti in Rome since June 2002. Since 1994, Mr. Turicchi has held positions with the Italian Ministry of the Treasury (now known as the Ministry of the Economy and Finance). In 1999, he was promoted to director responsible for conducting securitization operations and managing financial operations as part of the treasury’s debt management functions. Between 1999 and June 2002, Mr. Turicchi was also a member of the board of Mediocredito del Friuli; from 1998 until 2000, he served on the board of Mediocredito di Roma; and from 2000 until 2003, he served on the board of EUR S.p.A.

Matteo del Fante is proposed for appointment to the Supervisory Board at the annual general meeting of shareholders to be held on March 18, 2005. Mr. Del Fante has been the Chief Financial Officer of Cassa Depositi e Prestiti in Rome since the end of 2003. Prior to joining CDP, Mr. Del Fante held several positions at JPMorgan Chase in London, England, where he became Managing Director in 1999. During his 13 years with JPMorgan Chase, Mr. Del Fante worked with large European clients on strategic and financial operations. Mr. Del Fante obtained his degree in Economics and Finance from Università Bocconi in Milan in 1992, after which he studied at New York University’s Stern Business School.

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PERSONAL DATA
MR. BOZOTTI

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PERSONAL DATA
MR. DUTHEIL

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PERSONAL DATA
MR. ARBOLA

(Section 2:142, subsection 3 Dutch Civil Code)

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PERSONAL DATA
MR. DEL FANTE

(Section 2:142, subsection 3 Dutch Civil Code)

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PERSONAL DATA
MR. DE WAARD

(Section 2:142, subsection 3 Dutch Civil Code)

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PERSONAL DATA
MR. LOMBARD

(Section 2:142, subsection 3 Dutch Civil Code)

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PERSONAL DATA
MR. STEVE

(Section 2:142, subsection 3 Dutch Civil Code)

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PERSONAL DATA
MR. TURICCHI

(Section 2:142, subsection 3 Dutch Civil Code)

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PERSONAL DATA
MR. DUNN

(Section 2:142, subsection 3 Dutch Civil Code)

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Mr. Dunn does not hold any shares in the capital of STMicroelectronics N.V.

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PERSONAL DATA
MR. GAVOIS

(Section 2:142, subsection 3 Dutch Civil Code)

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PERSONAL DATA
MR. WHITE

(Section 2:142, subsection 3 Dutch Civil Code)

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Mr. White does not hold any shares in the capital of STMicroelectronics N.V.

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Proposed resolutions and shareholders information
for the Annual General Meeting of Shareholders of STMicroelectronics N.V.
to be held on March 18, 2005 in Amsterdam

The Supervisory Board proposes:

Agenda item 4-a - Resolution 1

To adopt the annual accounts for the financial year 2004, as drawn up by the Managing Board, examined and audited by the auditors PricewaterhouseCoopers N.V.

Agenda item 4-b - Resolution 2 and information

To distribute a dividend in cash of US$0.12 per common share.

Agenda item 4-c - Resolution 3

To discharge the sole member of the Managing Board for his management during the financial year 2004.

Agenda item 4-d - Resolution 4

To discharge the members of the Supervisory Board for their supervision during the financial year 2004.

Agenda item 5 - Resolution 5 and information

To appoint Mr. Carlo Bozotti as the new sole member of the Managing Board with the function of President and Chief Executive Officer for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).

To take note of the decision of the Supervisory Board, upon the proposal of Mr. Bozotti, to endorse the appointment of Mr. Alain Dutheil as Chief Operating Officer reporting to Mr. Bozotti as sole member of the Managing Board and President and Chief Executive Officer.

Agenda item 6 - Resolution 6 and information

The Supervisory Board proposes to reappoint Messrs. Arbola, de Waard, Lombard and Steve for three additional years, and to appoint for the same term of three years Messrs. Del Fante and Turicchi to replace the two outgoing members of the Supervisory Board. The Supervisory Board proposes to reappoint Messrs. Gavois, Dunn and White for one additional year, allowing the Supervisory Board the opportunity to consider renewals or new appointments in the coming years.

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Agenda item 7 - Resolution 7

To appoint PricewaterhouseCoopers N.V. as the Company’s auditors for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).

Agenda item 8 - Resolution 8

Agenda item 9 - Resolution 9

To increase the compensation of the Chairman and the Vice Chairman of the Supervisory Board to US$150,000 per annum; to increase the compensation of the President of the Audit Committee to US$150,000 per annum; to increase the compensation of the other members of the Supervisory Board to US$75,000 per annum; to maintain the compensation of the members of the Audit Committee at US$10,000 per annum; to maintain the compensation of the members of the Compensation Committee at US$5,000 per annum; to maintain the compensation of the members of the Strategic Committee at US$5,000 per annum; to maintain the compensation of the members of the Nominating and Corporate Governance Committee at US$5,000 per annum; to maintain the attendance fee per meeting of the Supervisory Board and of any Committee of the Supervisory Board at US$2,000 (with no limitation on the number of Committees on which Supervisory Board members may serve); and to maintain that attendance fees per meeting by telephone or videoconference at US$500.

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Agenda item 10 - Resolution 10

To approve the amendment to the Company's existing 2001 Employee Stock Option Plan as proposed by the Supervisory Board. The existing 2001 Employee Stock Option Plan will be amended in such a way that senior management may be granted restricted shares, subject to certain performance requirements for the Company to be fixed by the Supervisory Board. The maximum number of "restricted" shares shall be four million shares and shall fall within the outstanding number of approximately fifteen million options that still remain to be granted under the existing 2001 Stock Option Plan. The shareholders are also requested to confirm the Supervisory Board’s authority to reduce the vesting period and the term of Stock Options previously granted.

Agenda item 11 - Resolution 11

To approve for a three-year period the grant of stock-based compensation to members and professionals of the Supervisory Board based on the following terms and conditions:

Agenda item 12 - Resolution 12

To amend the Company’s Articles of Association in conformity with the draft notarial deed prepared by De Brauw Blackstone Westbroek, dated February 10, 2005 (Dutch wording) and to authorize any and all lawyers practicing with De Brauw Blackstone Westbroek to apply to the Ministry of Justice for the required declaration of no-objection as well as to execute the notarial deed of amendment.

The amendments result from changes in Dutch company law effective as of October 1, 2004 and from the Dutch Corporate Governance Code. The amendments mainly concern the following items:

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Agenda item 13 - Information

The Company is greatly indebted to Mr. Pasquale Pistorio for his very significant contribution as President, Chief Executive Officer and sole member of the Managing Board. We express our deep appreciation to Mr. Pistorio for his role in steering the Company since its creation in 1987 to become one of the leaders in the semiconductor industry. The Supervisory Board has also decided to name Mr. Pistorio Honorary Chairman of the Company.

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	1.	Discussion on and adoption of the annual accounts for the 2004 financial year;
	2.	Information on retained earnings and dividend policy and adoption of a dividend of $0.12 per common share;
	3.	Discharge of the sole member of the Managing Board; and
	4.	Discharge of the members of the Supervisory Board.
	5.	Appointment of the new sole member of the Managing Board.
	6.	a.	To appoint Mr. Gérald Arbola as a member of the Supervisory Board for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).
		b.	To appoint Matteo del Fante as a member of the Supervisory Board for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).
		c.	To appoint Mr. Tom de Waard as a member of the Supervisory Board for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).
		d.	To appoint Mr. Didier Lombard as a member of the Supervisory Board for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).
		e.	To appoint Mr. Bruno Steve as a member of the Supervisory Board for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).
		f.	To appoint Antonino Turicchi as a member of the Supervisory Board for a three-year term effective as of our 2005 AGM (to expire at the end of our 2008 AGM).
		g.	To appoint Mr. Douglas Dunn as a member of the Supervisory Board for a one-year term effective as of our 2005 AGM (to expire at the end of our 2006 AGM).
		h.	To appoint Mr. Francis Gavois as a member of the Supervisory Board for a one-year term effective as of our 2005 AGM (to expire at the end of our 2006 AGM).
		i.	To appoint Mr. Robert White as a member of the Supervisory Board for a one-year term effective as of our 2005 AGM (to expire at the end of our 2006 AGM).
	7.	Appointment of Pricewaterhouse-Coopers N.V. as the Company’s Auditors.
	8.	Approval of the compensation policy for the Managing Board.
	9.	Approval of the compensation of the members of the Supervisory Board.
	10.	Approval of the amendment to the Company’s existing 2001 Employee Stock Option Plan.
	11.	Approval of the new three-year Stock-based Compensation Plan for members and professionals of the Supervisory Board.
	12.	Amendment to the Articles of Association (including authorization to execute the deed of amendment) required by changes in Dutch law and corporate governance standards.

DETACH PROXY CARD HERE

Mark, Sign, Date and Return

the Proxy Card Promptly

Votes must be indicated

Using the Enclosed Envelope.

(x) in Black or Blue ink.

FOR

AGAINST

ABSTAIN

FOR

AGAINST

ABSTAIN

FOR

AGAINST

ABSTAIN

FOR

AGAINST

ABSTAIN

1

6a.

6f.

8

2

6b.

6g.

9

3

6c.

6h.

10

4

6d.

6i.

11

5

6e.

7.

12

 

The Voting Instruction must be signed by the person in whose name the relevant Receipt is registered on the books of the Depositary. In the case of a Corporation, the Voting Instruction must be executed by a duly authorized Officer or Attorney.		______________________________		______________________________
		Date        Share Owner sign here		Co-Owner sign here

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STMicroelectronics N.V.

Proxy Appointment and Voting Instruction Card
(Must be presented at the meeting or received by mail prior to 5:00 pm (eastern standard time) on March 15, 2005)

     The undersigned registered holder of common shares of New York Registry (each representing one common share of Euro 1.04 nominal amount of STMicroelectronics N.V.), hereby appoints ______________________ or The Bank of New York, as New York Transfer Agent and Registrar, through its agent, as the proxy of the undersigned to attend and address the Annual General Meeting of Shareholders of STMicroelectronics N.V. to be held in Amsterdam, The Netherlands, on March 18, 2005 and, in general, to exercise all rights the undersigned could exercise in respect of such common shares if personally present thereat upon all matters which may properly come before such Meeting and every adjournment thereof, and instructs such proxy to endeavor, in so far as practicable, to vote or cause to be voted on a poll (if a poll shall be taken) the common shares of STMicroelectronics N.V. represented by Shares of New York Registry registered in the name of the undersigned on the books of the New York Transfer Agent and Registrar as of the close of business on February 22, 2005, at such Meeting in respect of the resolutions specified on the reverse side hereof.

NOTE: Please direct your proxy how it is to vote by placing an X in the appropriate box opposite the resolutions specified on the reverse side hereof. If you do not fill in the blank provided above, then you will have appointed The Bank of New York as your proxy.

STMicroelectronics N.V. P.O. BOX 11473 NEW YORK, N.Y. 10203-0473

To change your address, please mark this box.

To include any comments, please mark this box.

Please complete and date this proxy on the reverse side and return it promptly in the accompanying envelope.

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PROXY
REGISTERED SHAREHOLDER

The undersigned:

(full name shareholder):
(private address/business address):

acting for the purposes hereof as holder of .............. (number) shares (in case type II: serial number of the share certificates: ...............), each share having a par value of EUR 1.04, in the share capital of STMicroelectronics N.V., established in Amsterdam, the Netherlands, hereinafter: the "Company",

declares to give the following instructions and to grant full power of attorney to:

0	Mr C.W. de Monchy, civil law notary practising in Rotterdam, the Netherlands, or one of the lawyers in the office of Mr C.W. de Monchy; or
0	(fill out name of person designated by you):

especially to, on behalf and in the name of the undersigned in his above mentioned capacity, attend the Annual General Meeting of shareholders of the Company, to be held on March 18, 2005 to sign the attendance-book of such meeting, to address the meeting and to vote on all shares mentioned above regarding the following items included in the agenda of such meeting:

Agenda item number 4a -Resolution 1

in favour / against / abstention *

Agenda item number 4b – Resolution 2

in favour / against / abstention *

Agenda item number 4c – Resolution 3

in favour / against / abstention *

Agenda item number 4d – Resolution 4

in favour / against / abstention *

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Agenda item number 5 – Resolution 5

in favour / against / abstention *

Agenda item number 6 – Resolution 6a – appointment Mr. Gérald Arbola

in favour / against / abstention *

Agenda item number 6 – Resolution 6b – appointment Mr. Matteo del Fante

in favour / against / abstention *

Agenda item number 6 – Resolution 6c – appointment Mr. Tom de Waard

in favour / against / abstention *

Agenda item number 6 – Resolution 6d – appointment Mr. Didier Lombard

in favour / against / abstention *

Agenda item number 6 – Resolution 6e – appointment Mr. Bruno Steve

in favour / against / abstention *

Agenda item number 6 – Resolution 6f – appointment Mr. Antonio Turicchi

in favour / against / abstention *

Agenda item number 6 – Resolution 6g– appointment Mr. Douglas Dunn

in favour / against / abstention *

Agenda item number 6 – Resolution 6h – appointment Mr. Francis Gavois

in favour / against / abstention *

Agenda item number 6 – Resolution 6i – appointment Mr. Robert White

in favour / against / abstention *

Agenda item number 7 – Resolution 7

in favour / against / abstention *

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Agenda item number 8 – Resolution 8

in favour / against / abstention *

Agenda item number 9 – Resolution 9

in favour / against / abstention *

Agenda item number 10 – Resolution 10

in favour / against / abstention *

Agenda item number 11 – Resolution 11

in favour / against / abstention *

Agenda item number 12 – Resolution 12

in favour / against / abstention *

The attorney is also empowered to address the meeting regarding all other matters to be discussed at the meeting, and furthermore to vote on all shares mentioned above regarding all items to be brought up for voting at such meeting. This proxy is granted with the right of substitution.

Executed in                     on                     2005.

 

                                                       

* Please indicate your choice

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